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Clifford Chance’s average profit per equity partner (PEP) figure plummeted by 37 per cent in the last financial year, down to levels last seen at the firm eight years ago.
After hitting a PEP of £1.15m in the 2007-08 financial year, the firm saw its average figure drop to £733,000 in 2008-09. While the firm had a difficult two years in terms of profits in 2003-04 and 2004-05, when PEP dropped to £562,000 and £651,000 resepectively, the last time PEP was at a level similar to last year’s figure was in 2000-01, when it stood at £721,000.
Revenues at the firm were also hit in the last financial year, dropping 5 per cent from £1.33bn to £1.26bn. As has been the case for all firms with a large international footprint, the fluctuation of dollar and euro strength against sterling over the course of the year enhanced the final turnover figure.
In the 2000-01 financial year the firm’s £721,000 PEP figure was against a turnover of £937m.
Admitting that the last 12 months have been exceptionally difficult for the firm, Clifford Chance managing partner David Childs (pictured) said reducing headcount across the firm had had a significant impact on profitability.
“For us, what characterised the last year was taking difficult decisions around headcount,” he said.
As reported by The Lawyer, the firm okayed plans to dramatically restructure its partnership at the beginning of the year (4 February 2009), having already agreed to cut its junior lawyer headcount earlier in the year (8 January 2009).
The restructuring is understood to be nearing completion.
Childs said that the firm took most of the hit of funding the restructuring in the 2008-09 balance sheet, with a small cost likely to hit the firm’s bottom line in the current financial year.
Other costs during the year included the launch of offices in Kiev and Abu Dhabi. Childs said there was also a small cost incurred when the firm signed a best friends relationship with Indian firm AZB & Partners.
In terms of turnover, Continental, Central and Eastern Europe were the biggest contributors over the course of the year, accounting for 41 per cent of total revenues between them.
London, which includes the Middle East, generated 39 per cent (£491.4m) of revenues while the US accounted for 11 per cent and Asia 8 per cent.
Admitting that the firm’s New York practice had suffered over the course of the year, Childs said the intention for the coming year is to build up the litigation practice in the city.
“We’ve downsized the US litigation practice,” he said. “Litigation had been quite problematic for us but that problem now lies behind us.
“We’ve got a good quantity of litigation resource in Washington DC, but are now smaller in New York than we should be. We’ll build on that and want a litigation practice that will be aligned to the rest of the network.”
The firm has lost a number of its US litigators in recent months, most recently seeing its former global head of litigation Mark Kirsch join Gibson Dunn & Crutcher along with partners Joel Cohen and Christopher Joralemon (10 June 2009).